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Consider a manufacturing industry that exports its output by ship. Each firm has total revenue per month of $1,400 and a monthly nonland production cost of $400. Each firm initially transports its output from its factory at location x to the port (x 5 0) on trucks. A ?rm’s freight cost is $100 per block from the port. Suppose a second transport option is developed: For a monthly rental cost of $300, a firm can use a matter transmitter to transport its output from its factory to the port, up to a distance of seven blocks. The marginal cost of the matter transmitter is zero. a. Draw two bid-rent curves for manufacturers, one for firms that use the truck and a second for firms that use the transmitter, for zero to 10 blocks from the port. b. Firms continue to use the truck over the following interval(s): _____ to ______; _____ to ______ c. Firms use the transmitter over the interval _____ to ______
Chapter 6, Problem 4(choose chapter or problem)
Matter Transmitter for Manufacturing
Consider a manufacturing industry that exports its output by ship. Each firm has total revenue per month of $1,400 and a monthly nonland production cost of $400. Each firm initially transports its output from its factory at location x to the port (x = 0) on trucks. A Firm’s freight cost is $100 per block from the port. Suppose a second transport option is developed: For a monthly rental cost of $300, a firm can use a matter transmitter to transport its output from its factory to the port, up to a distance of seven blocks. The marginal cost of the matter transmitter is zero.
a. Draw two bid-rent curves for manufacturers, one for firms that use the truck and a second for firms that use the transmitter, for zero to 10 blocks from the port.
b. Firms continue to use the truck over the following interval(s): _____ to ______ ; _____ to ______.
c. Firms use the transmitter over the interval _____ to ______.
Questions & Answers
QUESTION:
Matter Transmitter for Manufacturing
Consider a manufacturing industry that exports its output by ship. Each firm has total revenue per month of $1,400 and a monthly nonland production cost of $400. Each firm initially transports its output from its factory at location x to the port (x = 0) on trucks. A Firm’s freight cost is $100 per block from the port. Suppose a second transport option is developed: For a monthly rental cost of $300, a firm can use a matter transmitter to transport its output from its factory to the port, up to a distance of seven blocks. The marginal cost of the matter transmitter is zero.
a. Draw two bid-rent curves for manufacturers, one for firms that use the truck and a second for firms that use the transmitter, for zero to 10 blocks from the port.
b. Firms continue to use the truck over the following interval(s): _____ to ______ ; _____ to ______.
c. Firms use the transmitter over the interval _____ to ______.
ANSWER:Step 1 of 4
Given data:
Consider a manufacturing industry that exports its output by ship.
Each firm has total revenue per month of $1,400 and a monthly nonland production cost of $400.
Each firm initially transports its output from its factory at location x to the port (x = 0) on trucks. A Firm’s freight cost is $100 per block from the port.
Suppose a second transport option is developed:
For a monthly rental cost of $300, a firm can use a matter transmitter to transport its output from its factory to the port, up to a distance of seven blocks.
The marginal cost of the matter transmitter is zero.